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Wednesday, August 30, 2017

SBI to review homeloans for under-construction projects: Report

COUNTRY's largest lender State Bank of
India will turn cautious about the two real estate companies facing insolvency
proceedings. SBI has begun review of loans to buy home in unfinished
projects by Jaypee Infratech and Amrapali. The bank also indicated that as a prudent
step, it would prefer to extend loans to buy residences in finished projects.
Rajnish Kumar, Managing Director (National Banking Group) SBI said they are
assessing the number of home buyers who have been affected by the beleaguered
projects in Jaypee Infratech and Amrapali. At present people are... paying equated
monthly installments (EMIs) and “We are collating the number of such buyers who
have taken loans from us,” he said. “We are not saying that we would not give
loans for ongoing projects but our advice to home buyers would be to always go
for the ready to move in projects. Earlier the returns were high in ongoing
projects now it’s not the case,” he added.

Jaypee Infratech has not completed projects
on time and has failed to repay its lenders, and banks have referred this to
National Company Law Tribunal for insolvency resolution (NCLT). In June 2017, the Reserve Bank of India had
asked banks to take 12 large non-performing assets to NCLT. SBI’s home loan
book rose by 13.9 per cent to Rs 2,83,331 crore at end of June 2017. The share
of home loans in SBI’s total domestic credit was 17.62 per cent. Homebuyers
prefer SBI as it charges the cheapest rate of interest, around 8.35 now.

SBI earlier in May first week cut home loan rates by 10 to 25 basis points. SBI, however, refrained from cutting its marginal cost of lending rate (MCLR), which stands at 8% for one year. SBI has the largest share in the home loan market.
The bank now charges salaried borrowers 8.35 percent on home loans up to Rs 30 lakh. For loans above Rs 30 lakh, the bank charges 8.50 percent. It charges 8.60 percent on loans above Rs 75 lakh. The rate cut helped new borrowers since existing borrowers are locked into one-year fixed rate on interest as per the rule of arriving at lending rates. The reduction in rates comes within a month of five associate banks merging with the parent bank.
An eligible home loan customer can also avail of an interest subsidy of Rs 2.67 lakh under the Pradhan Mantri Awas Yojana scheme. SBI said to supplement the national affordable housing push, it has also come out with special offerings for construction finance to the builders for affordable housing projects.